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| Adaugat in data de 03-05-2011 |
Power deals amounted to 116 bln. USD in 2010, up 19% from 2009 levels, says a recent PwC report
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The global power deal market is finally seeing an upward trend in momentum from the lows reached in 2009.Total deal value in the non-renewable electricity and gas sectors is up 19% year on year from US$98bn to US$116bn in 2010 – a year which also saw an end to the deal stalemate in the US with a renewed deal flow that looks set to continue this year. Compared to the heady mountain of power deals transacted between 2005-2008, deal values remain low but conditions are in place for a return at least to the foothills of these peaks, according to PwC’s annual Power Deals review.
Globalisation of the power sector is moving forward on a number of fronts with, for example, companies looking at gaining a larger presence in emerging markets, strong international interest in infrastructure assets and signs of greater Chinese involvement, not just from grid companies but also independent power producers.
Expansion remains high on the agenda for a number of European companies as they weigh up moves to step up their international presence. For example, IP and GDF Suez have signalled that their merger will result in an initial period of rationalisation across their combined portfolio, followed by expansion in key growth markets.
“While we believe this deal revival will continue, much will depend on the extent to which demand returns in the main developed markets to give companies confidence in their capital expenditure renewal and new build programmes”, stated Alexandru Lupea, Partner, Assurance Services, Energy, Utilities and Mining Industry Group Leader with PwC Romania.
“If it does, we can expect promising conditions for the divestment opportunities that some companies will be seeking. In Europe particularly, this flow is likely to accelerate as firms free up capital and attract interest from sovereign wealth, infrastructure and pension funds”, added Lupea.
“In Romania, transactions will come most likely in the field of renewable energy, especially after the legal framework in this area will become clear. We may also expect that major European players to decide to invest in conventional energy generation capacities, taking into account that the electricity demand in the future years cannot be covered from renewable sources only”, said Lupea.
Globally, government clean energy policies will play an important role in shaping the background to deal activity this year and will increase the extent to which the price of power assets and, in turn, M&A valuations are determined by regulatory frameworks. The major capital expenditure and operational priorities faced by companies will reduce the scope for big acquisitions but, in turn, also spur smaller scale restructuring.
“The trend towards global power deals, with cross continental acquisitions, will potentially step up a gear in 2011 as for example with Asia Pacific, the focus of deal activity has switched to encompass more investment in targets outside the region . Also, the reaction to date of US regulators to the 2010 announced deals, suggests that the door is now more open to a greater flow of regulated utility deals”, commented Lupea.
“However, the continued deal flow in the US will hinge on the extent to which state regulators place hurdles in the way of completion. Further consolidations, network divestments in Europe and the continued outbound and inbound Asia Pacific deal appetite are set to keep totals buoyant in 2011, although stopping short of the acceleration needed for a return to the deal numbers of the mid 2000s”, concluded Lupea.
Power Deals includes analysis of all global cross-border and domestic power and gas utility deal activity. It is the latest in our Power Deals annual series. We include deals involving power generation, transmission and distribution; natural gas transmission, distribution and storage; and energy retail. Deals involving upstream operations upstream of these activities, including upstream gas exploration and production are excluded. Renewable deals are covered in our sister publication, Renewable Deals and therefore excluded.
The analysis is based on published transactions from the Dealogic ‘M&A Global database’ for all power, gas and utility deals. It encompasses announced deals, including those pending financial and legal closure, and those which are completed. Deal values are the consideration value announced or reported including any assumption of debt and liabilities.
Throughout the report, the Russian Federation is treated as a geographic entity in its own right. We have considered Asia Pacific as a region including Australasia, except where otherwise explicitly stated. All presented numbers of deals are inclusive of those deals with no reported value, unless specified. A full list of transactions throughout 2010 is available by visiting the Power Deals website at www.pwc.com/powerdeals..
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